Duke Energy lost $234 million in the second quarter as mild spring temperatures reduced electricity use. But the company says belt-tightening will help it meet its annual profit target.
It was the second straight quarter of unfavorable weather for the Charlotte-based utility company. A warm winter also hurt profits. Chief Financial Officer Brian Savoy said the company has avoided layoffs but has cut spending on outside services, slowed non-critical projects and limited travel and overtime.
"This is a temporary phenomenon. And we've seen extremely mild weather in the first half of 2023. The underlying fundamentals of our business are very strong," Savoy said in an interview.
Higher interest rates also hurt profits as the company missed Wall Street analysts' estimates for the quarter.
But Duke CEO Lynn Good told investors to expect a rebound. Duke said electricity use has skyrocketed with this summer's heat waves and it still expects to meet its goal of $5.55 to $5.75 a share this year.
"We've had an early look at July, and as you would expect July weather that's positive, consistent with the trend across the U.S., and August and September are in front of us. With our largest quarter ahead, we are reaffirming our guidance range for 2023."
Meanwhile, Savoy said long-term trends are in Duke's favor: Population and business growth remain strong in Duke's territories, which include the Carolinas, Florida and the Midwest.
"We're seeing strong customer growth — 1.8% residential growth — across the regions we serve," Savoy said. "Economic development in our territories is … it's in the billions (of dollars) every year. … And that's driving electric demand in the future."
Duke's loss for the three months that ended June 30 was down from a profit of $891 million in the second quarter of 2022. The loss of 32 cents per share fell from last year's profit of $1.14 per share. After adjustments for one-time items, Duke earned 91 cents a share, down from $1.09 a year ago.
This year's results included a charge to write down the value of Duke's two non-regulated commercial renewable energy units — one that sells rooftop solar to businesses and the other that operates solar and wind farms and sells the electricity to businesses, including other utilities. Duke announced those sales over the past two months.
Savoy said Duke expects those sales to close by year's end, completing Duke's shift to a fully regulated company.
"And once we do that, we will have clear line of sight to growth in our regulated footprint for a decade-plus. We have $145 billion capital plan underpinning that growth. And it's a move to the clean energy transition, serving our customers with clean energy every day," he said.
Duke plans to use the $3.2 billion in proceeds from those sales to pay off debt and clear the way for growth in its regulated utilities. The company is in the midst of a shift toward cleaner energy to help reduce the carbon emissions that cause global warming.
